Monday, 15 October 2012

Your Tax is in the Mail (and at the Pump)

This week starts with the unwelcome news
that long-announced new taxes are being implemented in Greece. This is seen in
the heating oil distribution “season” which started today, and in the mailing
of the 2010 property tax.

Heating
Oil Distribution

The reality of tax increases on heating oil
for housing hits this week, as distribution has officially started. Tax
increases announced since last year have the effect of raising the price from
about EUR 0.95 cents per litre at the beginning of 2012 to EUR 1.40 cents per
litre now. Obviously, everyone is up in arms. Greece has benefitted from very
warm weather so far this month, with daily temperatures running at 25 degrees.
This will end as winter sets in.

This is one of the more regressive
measures, despite the theoretical mechanism put into place to support
lower-income families by giving them (yet another) subsidy. Rather than
liberalising the sector, for instance by promoting competition at the refining,
importing and distribution, and allowing year-round distribution, the Greek
government is piling bureaucracy upon bureaucracy and tax upon tax upon what
should be a simple task, and punishing the poor and middle class in order to
collect higher taxes.

Even competition will not result in a
significant change in fuel prices: of the EUR 1.40 charged for 1 litre of fuel,
only about 20 cents are refiner, distributor and retailer margins. The rest is
tax.

2010
Property Tax Mailed Today

Today also marks the date when the 2010
property tax is mailed to property owners. This astounding story of delay dates
back to the Karamanlis and Papandreou administrations. To make a long story
short, the current government is finally implementing this measure, with their
customary excellent timing (in the middle of a depression).

We should remember that this year, property
is already being taxed via a special contribution on electricity bills (which
has been split into 5 instalments). So this property tax is in fact the second
such tax to be paid this year, and is entirely separate from additional
municipal or broadcaster taxes levied on the electricity bill, and also
separate from the “solidarity” tax on incomes levied on the income tax
statement. There is also a third
property tax, for high value properties. And there is also value-added tax on
property transactions, which adds a fourth layer of taxation.

This plethora of taxes on immovable property is indicative
of just how badly planned the tax system is, particularly when one considered
that there is no independent valuation of a property involved, but it is based
on district zoning coefficients, “objective values” and other purely
theoretical means of valuation.

The direct impact of these taxes are clear: new
construction and housing sales have plummeted; there are thousands of builders
out of work; hundreds of construction firms have closed; and the burden of
taxation remains disproportionately on the poor and middle classes.

Hundreds of thousands
of households have not been able to pay the previous property taxes. The Greek
Public Power Company reports that over 500,000 household electricity bills
remain unpaid (this number may in fact be higher).

So the government is
doubling down, by increasing the number of taxes that people are unable to pay.
In the meantime, the “Lagarde disk” of some 2,000 names of account holders at
HSBC Geneva together with several other lists of suspicious transactions make
their merry way through the media, while the transactions holders presumably
make their way further offshore.

PASOK's well-nourished head, Evangelos Venizelos, who was apparently responsible for the "disappearance" of the Lagarde list, continues to speak of social justice.

It should come as absolutely no surprise that in the latest Public Issue poll carried out for Skai (October 2012), SYRIZA is polling at 43% in voter intentions, versus 33% for New Democracy.

"The most difficult choice a politician must ever make is whether to be a hypocrite or a liar."

Subscribe via email

Comments on the Blog

I will post any and all comments to this blog, providing they respond to a specific post in a relevant manner, do not contain profanity or ad hominem attacks, and otherwise contribute to civilised discourse. If you do post a comment, please include your email if you wish a response - Blogger does not provide email addresses otherwise.